Skip to content


Firm Debichand Lakshmi NaraIn Vs. Radhey Raman (insolvent) and anr. - Court Judgment

LegalCrystal Citation
Subject Civil
CourtAllahabad
Decided On
Reported inAIR1949All645
AppellantFirm Debichand Lakshmi Narain
RespondentRadhey Raman (insolvent) and anr.
Excerpt:
- - further, it should also be remembered that, in this particular case, the applicant himself was the person who had applied for getting radhey raman declared insolvent and must have satisfied the court, as required under section 9, that the debt owing to himself was more than rs......when the absolute discharge was granted, must be deemed to be that there had been a tender of proof of debt by the applicant in february 1943. that proof had been accepted by the court in august 1943 and the applicant's name had been entered in the schedule of creditors. there was, however, an application under section 50, insolvency act pending against the entry of the applicant's name in the schedule and the court had to decide whether to expunge the name of the applicant from the schedule or to reduce the amount. therefore, on 9th january 1945, the applicant must be deemed to have complied with the provisions of section 33 (3) of the act. this provision does not say that the acceptance of the proof and the determination of the persons who had proved themselves to be creditors.....
Judgment:

Wanchoo, J.

1. This is a revision by firm 'Debi Chand Lakshmi Narain' under Section 75, Provincial Insolvency Act.

2. The facts leading to this revision are these. The applicant made an application on 5th July 1989 for declaring Radhey Raman an insolvent. Radhey Raman was declared insolvent on this application on 23rd of April 1940 and was ordered to apply for his discharge within two years. It seems, however, that the administration of the estate took more than two years. Eventually in, February 1943, the applicant tendered proof of his debt in the manner provided by Section 49 (1), Insolvency Act sending by post in a registered letter, to the Court, an affidavit verifying the debt. On 313t August 1943, the Court, under Section 33 (1), Insolvency Act, held that the debt of the applicant had been proved and ordered it to be entered in the schedule of creditors. On 23rd November 1944, however, the receiver made an application under Section 50, Insolvency Act, praying that the debt of the applicant had been improperly entered in the Schedule of creditors and the Court should either expunge the entry or reduce the amount of the debt. Thereupon, the applicant was ordered to produce his books of accounts before the receiver and he did so in December 1944. The matter came up before the receiver, for the last time, on 25th December 1944, and the accounts were shown to him and he was to submit a report to the Court thereafter. The matter was then adjourned to 6th January 1945. The case came up before the Court on 6th January and the applicant and his counsel were absent. Thereupon the Court ordered the expunction of the entry relating to the applicant from the schedule of creditors. Then the receiver made a report for the discharge of the insolvent opposite party. Therefore, on 9th January 1945 the Court ordered an absolute discharge of the insolvent, Radhey Raman as all the other creditors could be paid in full out of the money in the hands of the receiver and a sum of Rs. 2,000 would remain in surplus to be returned to the insolvent under Section 67, Insolvency Act. It seems that the applicant came to know about this discharge on 10th January 1945. He then made an application for restoration of his claim in the schedule and later, also filed an appeal. His restoration application was dismissed in April 1945, but his appeal was allowed in May 1945. Thereafter the insolvency Court again went into the question whether the applicant' debt should remain on the schedule or should be expunged or should be reduced. Finally, on 22nd September 1945, the insolvency Court ordered that a sum of Rs. 4,65l/l/- was due to the applicant on the date of the insolvency application. It went on to say that this should be entered in the schedule of creditors and the receiver was directed to distribute the money, according to law, to the creditors who had proved their debts including the applicant This order was wrongly worded inasmuch as the debt was not to be entered in the schedule of creditors as it had already been entered therein. What the insolvency Court really ordered was that the amount already entered in the schedule should be reduced to Rs. 4,651/1/-.

3. Against this order, no creditor appealed. But the insolvent filed an appeal because he was likely to lose a sum of Rs. 2,000 or so which he would otherwise have got, if the debt of the applicant had not been included. The learned Judge of the Court below allowed the appeal of the insolvent holding that as an order of absolute discharge had been passed on 9th January 1945 and there was no appeal against that order, the applicant could not prove his debt after an order of discharge. The applicant has, therefore, come up in revision to this Court against this order.

4. Mr. Jagdish Swarup, appearing on behalf of the applicant, has based his arguments on two grounds. In the first place, he argues that in view of Sections 63 and 64, Insolvency Act, it was open to a creditor to tender proof of his debt even after a discharge had been granted as the provisions of Section 33, Sub-section (1) were merely directory. In the second place, he urges that even if it be held that the provisions of Section 33, Sub-section (1) are not merely directory and a creditor must tender proof of his debt before the order of discharge, that has been complied with in this case and the Court below was, therefore, wrong in holding that the applicant could not come on the schedule of creditors as he had tendered proof of his debt after the discharge.

5. For the purpose of deciding this revision, we need not enter in great detail into the first point that has been urged on behalf of the applicant. Certain authorities of the Madras and Calcutta High Courts have been cited on behalf of the applicant in support of the first contention put forward on his behalf. These authorities were considered in this Court in the case of Jagdamba Pande v Ram Khelawan Upadhya and Ors. reported in A.I.R. (29) 1942 ALL. 344, and dissented from. We are, if we may respectfully say so, in agreement with the view taken in this case and fully agree with the reasoning given therein. It is not necessary for us to repeat what was said in this case. It is enough to say that the applicant's case cannot' succeed on this score.

6. The applicant is, however, on surer ground so far as the second argument is concerned. Section 33 (1), Provincial Insolvency Act, provides as follows:

When an order of adjudication has been made under this Act, all persons alleging themselves to be creditors of the insolvent in respect of debts provable under this Act shall tender proof of their respective debts by producing evidence of the amount and particulars thereof, and the Court shall, by order determine the persons who have proved themselves to be creditors of the insolvent in respect of such debts, and the amount of debts, respectively, and shall frame a schedule of such persons and debts.

It is clear from this that there are two things contemplated in this section: (1) tendering of proof by the creditor which can be done by producing evidence of the amount and particulars thereof and (2) a determination by the Court of the person who have proved themselves to be creditors of the insolvent and framing of a schedule of such persons and debts, The first thing, namely, the tendering of proof has to be done by the creditor and one of the ways in which he can do so is mentioned in Section 49 (1), Insolvency Act. The second thing is the act of the Court. The provisions of Section 33 (1) are obviously mandatory and though it has not been said in so many words in this sub-section that the proof must be tendered within a certain time, the obvious intention is that it should be so tendered within a reasonable time.

7. Then comes Section 33, Sub-section (3) which, to our mind, softens the rigour of Section 83, Sub-section (1). Sub-section (3) reads as follows:

Any creditor of the insolvent may, at any time before the discharge of the insolvent, tender proof of his debt and apply to the Court for an order directing his name to be entered in the schedule as a creditor in respect of any debt provable under this Act, and not entered in the schedule, and the Court, after causing notice to be served on the (receiver) and the other creditors who have proved their debts, and hearing their objections (if any), shall comply with or reject the application.

This provides that any creditor, who has not been able for some reason or the other, to prove his debt under Section 33 (1), may, at any time before the discharge of the insolvent, tender proof of his debt and apply to the Court for an order directing his name to be entered in the schedule of creditors. This sub-section, therefore, only requires that the creditor should tender proof of his debt before the order of discharge has been pas3ed. It is thereafter for the Court to decide whether to accept that proof and enter the debt in the schedule or not to do so. Obviously, it such an application has been made before the discharge, no Court would discharge an insolvent before such an application is decided. It was, therefore, not necessary in this sub-section to say that the insolvent should not be discharged before the Court had decided such an application. Therefore, if a creditor has tendered proof of his debt and the matter is under investigation and a discharge is made either by mistake or otherwise, that will not take away the right of the creditor to be put on the schedule and share in the dividends, provided there is money available in the hands of the receiver. The mere fact, therefore, that there (has been a discharge in this case would not take away the right of the applicant to be entered in the schedule of creditors, provided he had tendered proof of his debt and provided the receiver had money in hand.

8. In this case, the order of 6th January 1945, by which the name of the applicant was removed from the schedule of creditors was set aside by the appellate Court in May 1915, and the insolvency Court was directed to consider the application of the receiver, dated 23rd November 1944, afresh on the merits. The result of this order was that the position on 9th January 1945, when the absolute discharge was granted, must be deemed to be that there had been a tender of proof of debt by the applicant in February 1943. That proof had been accepted by the Court in August 1943 and the applicant's name had been entered in the schedule of creditors. There was, however, an application under Section 50, Insolvency Act pending against the entry of the applicant's name in the schedule and the Court had to decide whether to expunge the name of the applicant from the schedule or to reduce the amount. Therefore, on 9th January 1945, the applicant must be deemed to have complied with the provisions of Section 33 (3) of the Act. This provision does not say that the acceptance of the proof and the determination of the persons who had proved themselves to be creditors must also be finished before the discharge. All it requires is that the creditor must apply for an order directing his name to be entered in the schedule along with the proof in support of his application. This had been done by the applicant. Further, it should also be remembered that, in this particular case, the applicant himself was the person who had applied for getting Radhey Raman declared insolvent and must have satisfied the Court, as required under Section 9, that the debt owing to himself was more than Rs. 500 before he could get an order declaring Radhey Raman an insolvent. Under these circumstances, the applicant was certainly entitled to get a share in the money which was still in the hands of the receiver and had not been distributed to the creditors. It was, in our opinion, not necessary for him to appeal also against the order of 9th January 1945, by which the insolvent was given an absolute discharge. We ale, therefore, of opinion that the order of the Court below is wrong and must be set aside.

9. It was urged on behalf of the insolvent opposite party that the revision was incompetent as the creditors had not been made a party thereto and that their interest would also be affected by the order that we are about to make. It seems to us that an insolvent is hardly the person who can raise such an objection. We should also note that the other creditors apparently were not dissatisfied with the order, dated 22nd September 1945, by which the insolvency Court ordered the applicant to be entered in the schedule of creditors along with the other creditors and to share in the money in the hands of receiver. If anyone of them had been so aggrieved, he would not have sat quiet. Under these circumstances, we overrule this objection.

10. We, therefore, allow the revision, set aside the order of the Court below and direct that the name of the applicant shall remain in the schedule of creditors, but the amount entered against his name shall be reduced to Rs. 4,651 1-0. He will share in the distribution of the assets along with the other creditors subject, however to the condition that if any creditor has taken away any money, he will not be asked to refund it and the applicant will only get his share from whatever money remains in the hands of the receiver. The applicant will get his costs of all the Courts from Radhey Raman.


Save Judgments// Add Notes // Store Search Result sets // Organizer Client Files //